We make economics decisions every day: what to buy, whether to work or play, what to study. We respond to markets all the time: prices influence our decisions, markets signal where to put effort, they direct firms to produce certain goods over others. Economics is all around us.
This course is an introduction to the microeconomic theory of markets: why we have them, how they work, what they accomplish. We will start with the concept of scarcity and how specialization according to comparative advantage helps us achieve more than we could alone. Next we model a marked using the tools of Supply and Demand and learn what well working markets accomplish and what their limit are. We end by exploring the impact of government intervention on perfect markets. Examples are taken from everyday life, from goods and services that we all purchase and use. We will apply the theory to current events and policy debates through weekly exercises. These will empower you to be an educated, critical thinker who can understand, analyze and evaluate market outcomes.

Reviews

AP

The information I gained during this course will surely help me in becoming a better economist in the future and I found all the concepts quite easy as they were explained very well.

M

Apr 07, 2020

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The course was well structured and well delivered.The way each topic was delivered by the instructor, helped beginners like me to get a good understanding of the basics.ThankYou!

From the lesson

When Government Intervenes

In week four we learnt that the markets maximize the surplus that can be generated. So what happens if the government steps in and intervenes in the market? This week we will analyze price floors and ceilings, taxes and subsidies and learn how the best intentions sometimes lead to very unfortunate results.

Taught By

Rebecca Stein

Transcript

Taxes create a barrier between the consumers and the producers. In a market without taxes, what the consumers pay is what the producer gets. For example, suppose we have the market for soda drinks and suppose the going price for a bottle of soda is two dollars, and consumers at this price decide to purchase 500 units and producers at this price produce 500 units. We not only have an equilibrium quantity, we have an equilibrium price and that price is the price that consumers pay and of course also the price per unit that producers get. But now suppose we have the government intervene. Suppose the government steps in and sets a per unit tax of one dollar per bottle of soda. In other words, what happens now is the government is a barrier between the consumer and the producer. Every time the consumer wants to pay a certain amount of money, the government steals away the tax and only what is left over is given by the producer. In other words, if the consumers were trying to pay two dollars, the government would steal away a dollar and the producer would only get one dollar per bottle of soda. If the consumers paid three dollars per bottle of soda, the government would steal one dollar and the producer would get three minus one, which is two dollars per bottle of soda. So let's think about this barrier between the consumer and producer, and think about how we can graph this and interpret this graphically.

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